Quick Summary
Selland Pontiac-GMC, Inc. (plaintiff) contracted with George King (defendant) for the purchase of school bus bodies to be built on chassis supplied by Selland. Superior Manufacturing was to build the bodies but went into receivership and ceased operations, leading to nondelivery.
The main issue revolved around whether Selland acquiesced to the delay and if King properly applied UCC Section 2-615 regarding impediments to performance. The Court of Appeals affirmed the trial court’s ruling in favor of King, finding no breach of contract.
Facts of the Case
Selland Pontiac-GMC, Inc. (plaintiff) entered into a contract with George King (defendant), who was doing business as King’s Superior Bus Sales, to purchase four school bus bodies. These bodies were to be constructed on bus chassis that Selland would provide.
The agreement between the parties was initially verbal but was later formalized in writing on May 12, 1983. It was understood that Superior Manufacturing in Manitoba would manufacture the bus bodies, although no specific completion date was included in the contract. Selland needed the buses by late August for the new school year, a fact of which King was aware.
However, unbeknownst to both parties at the time of the contract, Superior Manufacturing was facing financial difficulties. Subsequently, Superior went into receivership, and ultimately ceased operations, making it impossible for King to fulfill his contract with Selland. As a result, Selland had to sell the bus chassis at a loss after their customer canceled the order for the buses.
Procedural History
- Selland Pontiac-GMC sued George King for breach of contract after King failed to deliver the bus bodies as agreed.
- The trial court found in favor of King, concluding that there was no breach of contract and that Selland had acquiesced to the delay in delivery.
- Selland appealed the trial court’s decision to the Court of Appeals of Minnesota.
I.R.A.C. Format
Issue
Whether Selland Pontiac-GMC, Inc. acquiesced to the delay in delivery and if the application of Minn. Stat. § 336.2-615 (UCC Section 2-615) by the trial court was correct in ruling that George King did not breach the contract.
Rule of Law
Under Minn. Stat. § 336.2-615 (UCC Section 2-615), delay in delivery or nondelivery by a seller is not considered a breach of contract if performance has been made impracticable by a contingency that both parties assumed would not occur, or by compliance with governmental regulation or order.
Reasoning and Analysis
The trial court’s findings were based on evidence that indicated Selland had knowledge of Superior’s receivership and chose to wait for a resolution rather than immediately canceling the contract with King. The court also found that the contract specifically mentioned Superior as the manufacturer of the bus bodies, making it a basic assumption of the contract that they would be supplied by Superior.
The appeals court concurred with these findings and also agreed that King provided seasonable notice to Selland about the delay and potential nondelivery as soon as he became aware of Superior’s financial difficulties. Thus, King’s actions were consistent with UCC Section 2-615 and he was not liable for breach of contract.
Conclusion
The Court of Appeals affirmed the trial court’s decision in favor of George King, holding that there was no breach of contract under Minn. Stat. § 336.2-615 (UCC Section 2-615) as Selland had acquiesced to the delay and King had given seasonable notice of potential nondelivery.
Key Takeaways
- The specific mention of a supplier in a contract can establish a basic assumption for performance under UCC Section 2-615.
- Seasonable notice by a seller regarding delivery delays or potential nondelivery due to unforeseen contingencies is critical to avoid being held liable for breach of contract.
- A buyer’s decision to wait for a situation to resolve rather than canceling an order can be seen as acquiescence to a delay in delivery.
Relevant FAQs of this case
What constitutes impracticability of performance under contract law?
Impracticability of performance occurs when unanticipated events render a party’s contractual obligations either extremely difficult or impossible to fulfill. The key is that the event was not foreseen by the parties when the contract was made.
- For example: If a natural disaster destroys a rare material needed for manufacturing a product, and there are no available substitutes, this could constitute impracticability.
How does acquiescence to a breach of contract affect the injured party's rights?
Acquiescence to a breach of contract implies that the injured party consents to the deviation from the contract terms and may forfeit the right to claim damages for that breach.
- For example: If a contractor delays work and the client explicitly agrees to extend the deadline, the client may not later claim damages for that specific delay.
In what ways can a seller provide 'seasonable notice' of delay in delivery?
‘Seasonable notice’ means giving timely and adequate warning about delivery delays, allowing the buyer to adjust plans accordingly. This notice must be communicated as soon as the seller becomes aware of the issue.
- For example: An importer who finds out about an incoming shipping embargo should promptly inform customers whose orders will be affected, rather than waiting until the delivery date passes.
References
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